In the simplest terms, arbitration is a catch-all term for a dispute-resolution that, while legally binding, does not utilize the court system. The practice has exploded in popularity in recent decades – especially among larger corporations and nursing homes. These entities prefer arbitration because the costs are generally lower, the dispute resolution process moves much faster than the courts, and parties generally do not have a right to appeal thus providing both parties some finality to their dispute. Opponents of arbitration say the extra-judicial process favors corporate interests and curtails the rights of victims – from limiting discovery to removing the opportunity to appeal. Further, arbitration also removes the right for a person to have their case heard before a jury, and instead substitutes a so-called “neutral arbitrator.”

Opponents also point out that there is often little actual “choice” involved in these clauses – an argument that rings especially true for potential retirement home residents. Generally the residents need a place to live, and thoughts concerning a facilities’ dispute resolution process take a backseat. In addition, as elderly people who are unable to take care of themselves, the burden of reviewing the contracts and paperwork for nursing home residents usually falls to a guardian or family member. That is why in September 2016, the Obama administration outlawed mandatory arbitration clauses in nursing home contracts, stating at the time that it is “almost impossible for residents or their decision-makers to give fully informed and voluntary consent to arbitration before a dispute has even arisen.” After a lawsuit by several nursing homes, a federal judge blocked enforcement until the case could be fully heard on its merits.

The Trump administration has now begun the process of rolling back the Obama-era rule. Preferring to allow nursing home facilities and their residents sort out their own legal arrangements, the Trump administration said that “arbitration agreements can be advantageous to both providers and beneficiaries because they allow or the expeditious resolution of claims without the costs and expenses of litigation.” Instead of the blanket-ban, the Trump administration says arbitration clauses must be written in “plain language” and explained to the resident or decision-maker “in a form and manner he or she understands.” Critics have, understandably, lashed out at these vague and likely unenforceable requirements. Tom Price, the Secretary of Health and Human Services, has said that nursing homes will use the money saved from court expenses to improve patient care. According to Secretary Price, repealing the arbitration rule is a step towards a nursing home system that is “collaborative” with the federal government.